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Operating Segments and Geographic Area
 12 Months Ended
Dec. 31, 2012
Operating Segments  
Operating Segments and Geographic Area

13.       Operating Segments and Geographic Region

 

Our operating segments are consistent with our internal organizational structure, the manner in which our operations are reviewed and managed by our Chief Executive Officer, who is our Chief Operating Decision Maker (“CODM”), the manner in which we assess operating performance and allocate resources, and the availability of separate financial information. Currently, we operate under three operating segments: Activision, Blizzard and Distribution (see Note 1 of the Notes to the Consolidated Financial Statements). We do not aggregate operating segments.

 

The CODM reviews segment performance exclusive of the impact of the change in deferred net revenues and related cost of sales with respect to certain of our online-enabled games, stock-based compensation expense, restructuring expense, amortization of intangible assets, and impairment of intangible assets and goodwill. The CODM does not review any information regarding total assets on an operating segment basis and, accordingly, no disclosure is made. Information on the operating segments and reconciliations of total net revenues and total segment operating income to consolidated net revenues from external customers and consolidated income before income tax expense for the years ended December 31, 2012, 2011, and 2010 are presented below (amounts in millions):

    Years Ended December 31,
    2012 2011 2010 2012 2011 2010
                     
    Net Revenues Income from operations
 Activision  $3,072 $2,828 $2,769 $970 $851 $511
 Blizzard   1,609  1,243  1,656  717  496  850
 Distribution   306  418  378  11  11  10
 Operating segments total   4,987  4,489  4,803  1,698  1,358  1,371
                     
Reconciliation to consolidated net revenues /                  
 consolidated income before tax expense:                  
 Net effect from changes in the deferral of net                  
  revenues and related cost of sales   (131)  266  (356)  (91)  183  (319)
 Stock-based compensation expense   ---  ---  ---  (126)  (103)  (131)
 Restructuring   ---  ---  ---  ---  (26)  (3)
 Amortization of intangible assets  ---  ---  ---  (30)  (72)  (123)
 Impairment of goodwill/intangible assets   ---  ---  ---  ---  (12)  (326)
Consolidated net revenues / operating income $4,856 $4,755 $4,447 $1,451 $1,328 $469
 Investment and other income (expense), net           7  3  23
Consolidated income before income tax expense          $1,458 $1,331 $492

For the years ended December 31, 2011 and 2010, restructuring expense of $1 million and $3 million, related to the Business Combination consummated in July 2008, is reflected in the “General and administrative expense” in the consolidated statement of operations, respectively. See Note 7 of the Notes to Consolidated Financial Statements for more detail.

 

Geographic information for the years ended December 31, 2012, 2011, and 2010 is based on the location of the selling entity. Net revenues from external customers by geographic region were as follows (amounts in millions):

 

   Years Ended December 31,
   2012 2011 2010
Net revenues by geographic region:         
 North America  $2,436 $2,405 $2,409
 Europe   1,968  1,990  1,743
 Asia Pacific   452  360  295
Total consolidated net revenues  $4,856 $4,755 $4,447

Net revenues by platform were as follows (amounts in millions):

  Years Ended December 31,
  2012 2011 2010
Net revenues by platform:        
 Console $2,186 $2,439 $2,330
 PC and Other 1 1,214  374  325
 Online subscriptions 2 986  1,357  1,230
 Handheld  164  167  184
Total platform net revenues  4,550  4,337  4,069
Distribution  306  418  378
Total consolidated net revenues $4,856 $4,755 $4,447

1 Revenues from PC and other consists of net revenues from the sale of PC boxed products, Skylanders franchise standalone toys products, mobile sales and other physical merchandise and accessories.

 

2 Revenue from online subscriptions consists of revenue from all World of Warcraft® products, including subscriptions, boxed products, expansion packs, licensing royalties, value-added services, and revenues from Call of Duty® Elite memberships.

 

Long-lived assets by geographic region at December 31, 2012, 2011, and 2010 were as follows (amounts in millions):

   Years Ended December 31,
   2012 2011 2010
Long-lived assets* by geographic region:         
 North America  $90 $105 $113
 Europe   40  46  46
 Asia Pacific   11  12  10
Total long-lived assets by geographic region $141 $163 $169

*The only long-lived assets that we classify by region are our long term tangible fixed assets, which only include property, plant and equipment assets; all other long term assets are not allocated by location.

For information regarding significant customers, see “Concentration of Credit Risk” in Note 2 of the Notes to Consolidated Financial Statements.